Swedish savings banks are likely to face weaker earnings in 2024 as interest margins fall and loan growth remains low, according to a report published by Nordic Credit Rating (NCR) today. A domestic recession which began last year is likely to persist, but the agency predicts a soft landing despite low economic growth and a slight rise in unemployment.
"We anticipate a slightly weaker performance by Swedish savings banks in 2024 after a robust 2023," said NCR credit analyst Ylva Forsberg. "However, exceptional capital ratios and prudent loss provisioning should offset any significant turbulence."
NCR does not expect significant realised losses due to high securitisation levels across the savings bank sector, despite a risk of increased at-risk and nonperforming loans in the year ahead. Savings banks are well prepared to set aside higher loan-loss provisions and deal with periods of non-payment, thanks to strong earnings in 2023 and their generally exceptional capital ratios, the report said. The agency expects an increased focus on limiting reliance on deposits, greater attention to capital use, and stronger efforts to combat fraud and money laundering.
Contacts:
Ylva Forsberg, analyst, +46768806742, ylva.forsberg@nordiccreditrating.com
Sean Cotten, chief rating officer, +46735600337, sean.cotten@nordiccreditrating.com